- The strategy
- Explore the funds
- Focusing on quality companies offering sustainable and growing income streams across Asia
- A low-volatility portfolio designed to deliver an attractive through-the-cycle total return
- Investing for the long term
Focusing on companies with both the ability and intention to sustain and grow attractive dividends, we believe we can offer a portfolio capable of delivering an attractive through-the-cycle total return with superior risk characteristics.
Our investment philosophy
We believe Asian markets are inefficient, with prices of individual companies often extrapolating near-term trends that are unlikely to persist in the long term. This is an enduring feature of equity markets in the region. We seek to identify opportunities using our long-term and often contrarian approach combined with a valuation discipline, while actively managing our clients’ assets.
Focusing on intrinsic value rather than pure statistical value, we recognise that businesses with different return characteristics will attract different valuations. While this may seem self-evident, we are acutely aware that the price paid will be the most significant determinant of an investment’s success. Pay too much for an investment and it can generate a poor return, no matter how good its subsequent operational performance is. Ultimately, we seek to own the highest quality businesses at a valuation that adequately compensates our clients for a range of uncertain outcomes. Having conviction in our beliefs and commitment to our process allows us to be contrarian in our approach.
We believe that understanding governance and the management of risks to multiple stakeholders is also a key factor in successful investing in Asia. By understanding the relevant risks and incentives of various parties we can enhance returns for our clients. This also includes a focus on sustainable business models as they relate to practices involving their employees and local communities as well as their environmental impact.
Having invested in the Asian region for 20 years, we have observed numerous market cycles, where companies, countries and sectors have fallen in and out of favour with the changing economic circumstances and prevailing sentiment. Foreign capital flowing in and out of the region can often exacerbate these swings. We have found the region rewards research, patience, discipline and experience. By combining these with our long-term focus, we believe we can manage risks and identify successful investment opportunities for our clients’ benefit.
Designed as a defensive, low-volatility strategy
Underpinning this strategy is the observation that dividends contribute approximately half of total returns in Asia over the long term. Moreover, Asian businesses have some of the strongest balance sheets in the world, with generally low but growing pay-out ratios. This translates into an attractive and powerful dividend growth story over the coming years in one of the world’s most dynamic regions. By focusing on companies that demonstrate both the ability to sustain dividends and the intention to grow them over time, we believe this strategy is capable of delivering a predictable through-the-cycle total return with superior risk characteristics.
Our investment approach
We actively manage portfolios, investing in listed securities across Asia that we believe have sustainable and growing income streams and the potential for long-term capital growth. Our approach is high conviction stock picking, with ideas generated through a rigorous application of quantitative and qualitative research and experience.
We initially seek to identify companies that have both the ability to pay and sustain dividends as well as intention to increase them over time through two proprietary screens. We also exclude highly cyclical business models given we are targeting defensive and sustainable dividends.
Responsible investing is important to us. We believe companies that best manage their environmental, social and governance (ESG) risks and opportunities will also benefit multiple stakeholders while generating sustainable, long-term returns to shareholders. We examine companies on their approach to ESG risks as well as opportunities.
Our experienced team then undertakes detailed quantitative and qualitative analysis (bottom-up research) on those stock ideas, focusing on the company’s business model, management quality and capital allocation policy as well as industry structure. We pay particular attention to company balance sheets and cashflow generation to help offer downside protection in times of market volatility.
The result is a benchmark unaware portfolio that holds 25–40 stocks with an emphasis on preserving capital and delivering favourable risk-adjusted returns.
Our experienced, aligned team
Our team has a combined experience of over 170 years managing Asian equities. Our portfolio managers are also investment analysts, emphasising the importance of our fundamental company research. Similarly, there is a strong alignment of interest with our clients through our remuneration structure including key investment professionals investing in underlying vehicles alongside clients.
A team of experienced and dedicated investment professionals.